Cracker Barrel 2015 Annual Report Download - page 32

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Notes To ConsolidatedFinancial Statements
(Inthousands except share data)
CRACKER BARRELOLD COUNTRY STORE, INC.
1DESCRIPTION OF THE BUSINESS
Cracker Barrel Old Country Store, Inc. and its aliates
(collectively, in the Notes, the “Company”) are principally
engaged in the operation and development in the United
States(“U.S.”)of the CrackerBarrel Old Country Store®
(“CrackerBarrel”) concept.
2SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
GAAP –e accompanying Consolidated Financial
Statements have been prepared in accordance with generally
accepted accounting principles in the U.S. (“GAAP”).
Fiscal year –e Company’s scal year ends on the Friday
nearest July 31st and eachquarterconsists of thirteen weeks
unless noted otherwise. Referencesin these Notesto a year
or quarterare to the Company’s scal year or quarterunless
noted otherwise.
Principles of consolidation –e Consolidated Financial
Statementsinclude the accountsof the Companyand
its subsidiaries,allof which are wholly owned. All signi-
cant intercompany transactionsandbalanceshave
been eliminated.
Cash and cash equivalents –e Company’s policy
is to considerallhighly liquid investments purchased
with an originalmaturity of three months or less to be
cash equivalents.
Accounts receivable– Accounts receivable represent their
estimated net realizablevalue. Accounts receivable are wrien
owhen they are deemed uncollectible.
Inventories – Inventories are statedat the lower of cost
or market. Cost of restaurant inventory is determined by the
rst-in, rst-out (“FIFO”)method. Retail inventories are
valued using the retail inventory method (“RIM”) except at
the retail distribution centerwhich uses average cost.
Approximately70% to 75% of retail inventories are valued
using RIM andthe remaining retail inventories are valued
using an average cost method. See Note 4 for additional
information regarding the components of inventory.
Valuation provisionsareincludedfor retail inventory
obsolescence, retailinventoryshrinkage, returnsand
amortization of certain items.Cost of goods soldincludes an
estimate of retail inventory shrinkage that is adjusted upon
physical inventory counts. Annual physical inventory counts
areconductedthroughout the third and fourth quarters
based upon a cyclical inventory schedule. An estimate of
shrinkageis recorded for the time period between physical
inventory countsby using a three-yearaverage of the
physical inventories’ results on a store-by-store basis.
Property and equipment – Property andequipment are
statedat cost. For nancial reporting purposes, depreciation
andamortization on these assets are computed by use of
the straight-line and double-declining balance methods over
the estimated useful lives of the respective assets, as follows:
Years
Buildings and improvements 30-45
Buildings under capital leases 15-25
Restaurant and other equipment 2-10
Leaseholdimprovements1-35
Accelerated depreciation methods are generally used for
income tax purposes.
Total depreciation expense anddepreciation expense
related to store operationsfor eachof the three yearsare
as follows:
2015 2014 2013
Total depreciation expense $72,390 $67,620 $65,351
Depreciation expense related to
store operations* 66,754 62,746 60,574
*Depreciation expenserelated to storeoperations is included in other store
operating expenses in the ConsolidatedStatements of Income.
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